USPS IG: Postal Service Would Benefit From Its Own Workers Comp Program

USPS IG says Federal Employees Compensation Act (FECA) has become a ‘lucrative retirement plan’

The USPS Office of the Inspector General David C. Williams prepared testimony for April 13, 2011 hearing before the Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy Committee on Oversight and Government Reform House of Representatives on “Federal Employees’ Compensation Act: A Fair Approach? (1:30 PM – 3:30 PM).”

Mr. Chairman and members of the subcommittee, thank you for the opportunity to discuss workers’ compensation issues and reform. The Federal Employees Compensation Act (FECA) requires federal agencies to participate in the Department of Labor’s (DOL) FECA program. DOL bills each agency annually for compensation paid and non-appropriated agencies also must pay DOL an annual administrative fee.

Eligible disabled employees receive 66 2/3 percent (or 75 percent with dependents) of their basic salary, tax-free plus, medical-related expenses. Also, FECA places no age limit on receiving benefits. This is substantially more than other employees receive when they retire. Though unintended, FECA has become a lucrative retirement plan.

The Postal Service is the largest FECA participant, paying more than $1 billion in benefits and $60 million in administrative fees annually, creating a long-term liability of $12.6 billion. As of February 2011, the Postal Service had about 15,800 disabled employees. Over 8,700 were at least age 55, about 3,100 were at least age 65, and about 900 were between age 80 and 98.

Certain aspects of the program make it susceptible to fraud:

* The claimant’s ability to change their story until their claim qualifies;
* The claimant’s ability to hire a physician rather than use a plan physician to assess their injuries and condition;
* The program incentivizes DOL to collect larger fees if they approve more claims and lose budget dollars if they deny them;
* The lack of effective DOL case management; and
* Employers not being allowed to present or respond to evidence at hearings.

DOL has some fraud detection responsibility, but it’s unclear to what extent. They advise agencies to actively manage their own programs, while still charging administrative fees. There is not a clear delineation of responsibility between (1) agency program managers and (2) their OIGs and (3) DOL and (4) its OIG in detecting fraud. Accordingly, there is significant risk that program oversight will be duplicative or not done.

Since October 2008, we have removed 476 claimants based on disability fraud, recovered $83.5 million in medical and disability judgments, and halted significant future losses. In one investigation, a fraudulent claimant received $142,000 in benefits while she was working as a real estate agent, and we had pictures of her hiking and bungee jumping. She even bought a boat named “Free Ride.” Other investigations have found fraudulent claimants working as martial arts instructors, landscapers, hairdressers and mechanics.

Working with DOL is difficult. They control needed documents, but are often not responsive when we investigate cases. Additionally, they do not take timely action when told that a claimant no longer qualifies for benefits. Even when a claimant is convicted, DOL is slow to terminate benefits.

* We gave DOL an investigative report in 2006 which found a claimant was exceeding his limitations. Even though the employee was willing to return to work, DOL did not reduce his benefits until 2011.
* Fourteen months ago we gave DOL an investigative report containing evidence of fraud by a disability claimant and a subsequent medical exam confirmed the claimant was able to return to work with no restrictions. Despite requests, DOL has taken no action and continues to pay benefits.
* Over a 5-year period one claimant submitted $190,000 in unsupported mileage reimbursements that DOL paid without question.

Stress claims in particular are at high risk for fraud. If a doctor sees a correlation between stress and a claimant’s work, the claim is often approved. In one instance, a claimant’s emotional reaction to a change in work schedule was enough for DOL approval.

The OIG also investigates medical providers involved in criminal matters, including disability fraud and we have recovered $78.5 million since FY 2009. Unfortunately, DOL provides no standardized billing guidelines for doctors, making it difficult to hold them accountable for fraudulent billings. If DOL instituted a system similar to Medicare’s, prosecutors would be more inclined to take these cases. From our reviews, the Postal Service would benefit from having its own workers’ compensation program. Savings would be in the areas of reduced administrative fees, accurate assessment of claims by plan physicians, buyout options, mandatory retirements, immediate access to records, and improved accountability over case management.

From our reviews, the Postal Service would benefit from having its own workers’ compensation program. Savings would be in the areas of reduced administrative fees, accurate assessment of claims by plan physicians, buyout options, mandatory retirements, immediate access to records, and improved accountability over case management.

FECA is in need of significant reform. Such reform could reduce the substantial risk for fraud and improve program efficiency and effectiveness, while protecting reasonable benefits for legitimate claimants.

5 thoughts on “USPS IG: Postal Service Would Benefit From Its Own Workers Comp Program

  1. JB, I’ve seen it the other way. I’ve seen these so called “investigators” show me what they said was a picture of a carrier who couldn’t work on a tractor taken from almost a mile away (you couldn’t tell who it was from that distance) and use that to assert that the carrier’s claim was fraudulent. They had no argument of course when presented with the fact that 1) Riding a tractor in no way violated his restrictions on lifting, walking, or standing for long periods, and 2) That he didn’t even own a tractor so no one really had an idea of who the person in the picture was.

    I find several points made by the IG extremely troublesome. The idea that an employee utilizing his/her own physician instead of a “plan/contract” physician would decrease the risk of fraud. Maybe on the part of the employee but he refuses to mention the 100% absolute certainty of an INCREASE in fraud on the part of the PO’s future WC program. He insinuates without saying so directly that physicians employed by the employee are more likely to help the employee commit fraud but again doesn’t mention the certainty that physicians employed by the PO would be just as likely to commit fraud in the other direction by denying valid claims based on the fact that they know they no longer have the DOL looking over their shoulder. As it is now they have the ability to have their own physician examine an employee to see if their diagnosis confirms what the employee’s physician originally diagnosed. What they want is to have physicians employed by them, PAID for by them, to determine whether or not you have a valid claim and of course, knowing how honest and even handed the Postal Service is with it’s employees they won’t apply any pressure on plan physicians to make sure they approve the absolute minimum of WC claims. Color me skeptical.

    For example, we had a carrier who slipped and fell at work and landed on his arm. Postal mgt never informed him of his right to see his own physician, which they are obligated to do, and took him to see their contract physician. Their physician put an ace bandage on the injury and told him that it looked like a pre-existing condition based on her examination of 4 minutes. Also, the supervisor took him to the Dr and walked right into the examining room with the employee. When the employee told the supervisor in front of the Dr that he did NOT want her in the room with him she told him that he did not have a choice. All with no reaction from the supposed medical professional in the room. Guess she knew who she was working for, right?? Once again, I’m sure stuff like this won’t happen more often if the PO takes away your right to utilize your own physician and have to use only their contract physicians. Right…….

    Also, the proposal for immediate access to medical records. Right now we have the DOL’s OWCP program as a “buffer” if you will between us and mgt. We’ve had cases of mgr’s going straight to Dr’s offices trying get copies of employee’s medical files. We’ve had cases of PI’s going into Dr’s offices claiming to be FBI agents and making wild accusations and asserting that they were only trying to “help” the Dr’s patient in their attempts to get not just medical records pertaining to the on the job injury but to every medical condition the employee has ever had. Do you really want these people to have MORE access to your medical records?? They have the ability to get access to information they need. Not everything they want. I’m just fine with that.

    Then there’s the buyout options and mandated retirements. They don’t have mandated retirements for regular employees but would have it for injured employees?? How is that fair?? Would mandated retirements apply to mgt positions as well?? I highly doubt it. Also, the buyout option is unclear. Is it a mandatory buyout where you just have to accept whatever amount mgt offers your without any recourse?? How would they calculate it?? What benefits, if any, would you still receive if you accepted the buyout?? Too many questions left but we did get one veiled answer from the IG. Don’t you dare get hurt while on the job. If you do, don’t report it. If you report it the IG himself is coming for you.

  2. Wage Slave….I believe billg was referring to exactly what he stated…..not employees that have worked for years and become injured…I have seen some of what he is referring to also, more than should be considered “acceptable”….definitely some of what I have seen SHOULD be investigated THOROUGHLY…I have also “overheard” some of these “injured” and I certainly got the impression they were anything but….

  3. “billg”:
    So, what you are saying is that there ARE NO LEGITIMATELY INJURED EMPLOYEES, or even worse, that ALL EMPLOYEES THAT ARE INJURED

    I have worked for the USPS for thirty-five years. I have a bid job that takes
    me around the work room floor of our P&DC and I have to do heavy lifting,
    pushing, pulling and various other duties. I have been injured three times
    on the job, by errors of others…and I was placed on LIMITED DUTY, not
    LIGHT DUTY for an extended period of time while I went through physical

    For a person, such as you, to categorically judge the “true condition” of an
    injured worker is ludicrous….this is why the USPS has an Injury Comp.
    Office, and is why they investigate questionable cases….and I might
    suggest that IF YOU WERE EVER INJURED OR DISABLED, your desire
    to eliminate the ability of a worker to remain employed by the USPS while
    recovering, just might come around to bite you in the arse….

  4. As a 26 year postal employee who has seen new employees work their 90 days and after their 90 days go on light duty leaving others to carry them till the they they retire.

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